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Dynamic Oligopoly with Sticky Prices: Off-Steady-state Analysis

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  • Agnieszka Wiszniewska-Matyszkiel
  • Marek Bodnar
  • Fryderyk Mirota

Abstract

In this paper we carry out a comprehensive analysis of the model of oligopoly with sticky prices with full analysis of prices’ behaviour outside their steady-state level in the infinite horizon case. An exhaustive proof of optimality is presented in both open loop and closed loop cases. Copyright The Author(s) 2015

Suggested Citation

  • Agnieszka Wiszniewska-Matyszkiel & Marek Bodnar & Fryderyk Mirota, 2015. "Dynamic Oligopoly with Sticky Prices: Off-Steady-state Analysis," Dynamic Games and Applications, Springer, vol. 5(4), pages 568-598, December.
    • Handle: RePEc:spr:dyngam:v:5:y:2015:i:4:p:568-598
    DOI: 10.1007/s13235-014-0125-z
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    12. Fershtman, Chaim & Kamien, Morton I, 1987. "Dynamic Duopolistic Competition with Sticky Prices," Econometrica, Econometric Society, vol. 55(5), pages 1151-1164, September.
    13. Hassan Benchekroun, 2003. "The closed‐loop effect and the profitability of horizontal mergers," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 36(3), pages 546-565, August.
    14. Luigi De Cesare & Andrea Di Liddo, 2001. "A Stackelberg Game Of Innovation Diffusion: Pricing, Advertising And Subsidy Strategies," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 3(04), pages 325-339.
    15. Michel, Philippe, 1982. "On the Transversality Condition in Infinite Horizon Optimal Problems," Econometrica, Econometric Society, vol. 50(4), pages 975-985, July.
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    Citations

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    Cited by:

    1. Edilio Valentini & Paolo Vitale, 2022. "A Dynamic Oligopoly with Price Stickiness and Risk-Averse Agents," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 8(3), pages 697-718, November.
    2. Zeng Lian & Jie Zheng, 2021. "A Dynamic Model of Cournot Competition for an Oligopolistic Market," Mathematics, MDPI, vol. 9(5), pages 1-18, February.
    3. Rajani Singh & Agnieszka Wiszniewska-Matyszkiel, 2020. "A class of linear quadratic dynamic optimization problems with state dependent constraints," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 91(2), pages 325-355, April.
    4. Valentini, Edilio & Vitale, Paolo, 2019. "Uncertainty and Risk-aversion in a Dynamic Oligopoly with Sticky Prices," ETA: Economic Theory and Applications 285025, Fondazione Eni Enrico Mattei (FEEM).
    5. Mehdi Fadaee & Hamideh Esfahani, 2023. "Do oligopolistic firms benefit from being forced to act non‐strategically?," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(1), pages 127-147, March.
    6. Katarzyna Kańska & Agnieszka Wiszniewska-Matyszkiel, 2022. "Dynamic Stackelberg duopoly with sticky prices and a myopic follower," Operational Research, Springer, vol. 22(4), pages 4221-4252, September.
    7. Lu, Fuxiao & Tang, Wansheng & Liu, Guowei & Zhang, Jianxiong, 2019. "Cooperative advertising: A way escaping from the prisoner’s dilemma in a supply chain with sticky price," Omega, Elsevier, vol. 86(C), pages 87-106.
    8. Charalambos Christou, 2015. "A model of dynamic competition with sticky prices," Discussion Paper Series 2015_05, Department of Economics, University of Macedonia, revised Nov 2015.
    9. Simon Hoof, 2021. "Dynamic Monopolistic Competition," Journal of Optimization Theory and Applications, Springer, vol. 189(2), pages 560-577, May.

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    More about this item

    Keywords

    Cournot oligopoly; Sticky prices; Nash equilibrium ; Dynamic oligopoly model; Open loop; Feedback; Closed loop; 91A10; 91A23; 91A40; 91B24; 91B55; L13 ; C72 ; C73 ; C61;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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